Online and direct marketing personal shopping firm Express Gifts Ltd is to pay £12.5 million in compensation after selling insurance policies to customers that the Financial Conduct Authority (FCA) described as being of “little or no value.”
Between January 2005 and May 2015, Express Gifts sold an accidental damage and theft insurance policy under the names Property Insurance and Purchase Protection Insurance.
The regulator says Express Gifts has now agreed with them that the insurance was of extremely limited value, as the items being insured were mainly items of clothing, for which consumers do not normally take out insurance.
Express Gifts will now contact all 330,000 customers who are due compensation, to explain the process for refunding the premiums they paid, plus interest.
Express Gifts is one of the two main divisions of its parent company Findel plc.
Jonathan Davidson, Director of Supervision – Retail and Authorisations at the FCA, said:
“It is good news for consumers that Express Gifts has reached agreement with us that this insurance was of low value to customers. It is important that firms offer value for money.
“We expect firms to identify where insurance products of little or no value have been sold to customers and take appropriate action. There is a responsibility on firms, whether they are responsible for the design or the distribution of these products, to ensure the products offer value for their customers.”
The news release on the firm’s website is headed ‘We found a problem, now we are fixing it!’. The news item highlights that it was the firm who identified the potential issues with the insurance, by saying:
“Through our own review we have identified concerns with this insurance, which was sold through the Ace and Studio brands, and have notified the FCA. We concluded, along with the FCA that the insurance did not provide adequate value to customers. Therefore, together with Assurant General Insurance Limited and ANV (which is now part of AmTrust at Lloyd’s) who were at various times the underwriters of the insurance, we wish to put customers back in the position that they would have been in had they not purchased the insurance.”
This episode has echoes of other cases of mis-selling, where consumers have been sold insurance that is of little use to them. For example, payment protection insurance was often sold to the self-employed, or to those with medical conditions, whose ability to claim on certain sections of the policy was severely restricted. The various insurances offered with packaged bank accounts were also sold to many people who were unable to claim, or who would have had no need for the insurance.
As Mr Davidson’s concluding remarks indicate, the onus is on FCA authorised firms to ensure that they design products in the interest of their customers. Where things go wrong, and inappropriate products are sold, the firms are expected to take action and pay any compensation that is due.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.